I met Neal, CEO of Alphyn Biologics, about four years ago when the company was very young. A few months ago, I got a call from Scott Jacobs at Queen City Angels suggesting we get in on a hot Series B round. The company? Alphyn Biologics. Intrigued, I reconnected with Neal, who brought me up to speed on their lead product, Zabalafin, plant-based topical treatment for atopic dermatitis, also known as eczema, that is challenging to treat and common in both children and adults. A former executive at Wyeth, Neal has multiple exits under his belt; he’s not a shy person and shared Alphyn’s plans for a quick exit. The VisionTech Screening Committee agreed the opportunity was compelling and extended an invitation to Neal to pitch on Monday, May 19 at 12 noon. I’m pleased Neal agreed. Here’s my preview.
BP: We’re excited to bring the opportunity with Alphyn Biologics to VisionTech investors. It’s not often angel groups are involved in Series B rounds.
NK: We are moving quickly in our efforts to complete our Phase 2b clinical trial of Zabalafin and prepare for a liquidity event at the same time. We’ve made it a point to prioritize angel investing groups and high-net-worth investors. This deal is a great fit for angels. We’re thrilled to have Queen City Angels as our lead investor at $7 million and hope VisionTech will join us. We’re hitting key milestones and believe we can deliver a highly favorable exit outcome to our angels.
BP: Is there a story behind the wolf dragon logo? It reminds me of a medieval coat of arms.
NK: The main ingredient in our product is a defense liquid from trees which is colloquially called “dragon’s blood.” Our Chief Scientific Officer Gary Pekoe loves Germanic folklore and imagery. The wolf dragon logo combines two unique storylines into a memorable brand.
BP: You have four co-founders with a number of blockbuster drugs under your belts as well as extremely high multiple exits.
NK: There’s great value in relationships and experience. During my career at Wyeth, I was involved in acquisitions, divestitures, and product launches before serving as CEO for multiple life science businesses with exits as high as 50x. In 2000, I met Gary Pekoe whose successful background is in R&D, clinical trials and regulatory affairs. His successes include drugs like Bactroban® and Keytruda® as well as spearheading FDA fast-approval programs. Alphyn is the fourth company in which we’ve worked together. Gary found the raw material that becomes Alphyn’s drug years ago when he ran his own contract research organization where he was engaged by early-stage life science companies as their contract VP Regulatory, VP Clinical Trials and or VP R&D.
Our president, Steven Pentelnik, spent 35 years with P&G where one of his responsibilities was for its $1 billion early-stage tech portfolio. He now has three startups under his belt. Jasmine Mink, manager of regulatory affairs, has worked with Gary for ten years developing Zabalafin. In 2019, we all came together and formed Alphyn Biologics.
BP: Why did you choose Atopic Dermatitis as your beachhead?
NK: This is an interesting story. When we first started Alphyn, we realized we had an unbelievable good antibiotic. So we talked with the FDA about going this route. They steered us to a skin disease called impetigo. We found an expert at the University of Miami and invited him to come on as a scientific advisor. He looked at what we had and said it was the perfect solution for atopic dermatitis. It was a much bigger market opportunity, which would make it easier to raise money. Focusing on atopic dermatitis, we are able to use our excellent data for bacteria plus our drug’s mechanisms of action for the other two key problems of atopic dermatitis, itch and inflammation, and here we are.
BP: What pain points are you solving? Why are current treatments falling short?
NK: Atopic dermatitis is the world’s biggest dermatology problem. It has traditionally been thought to be caused by inflammation. More recently bacteria have been shown to drive the disease and make it worse. In a few recently published papers, bacteria have been suggested as one of the causes of the disease. The most debilitating patient problem of atopic dermatitis is itching like a sonofagun. Current treatments, namely the old standard steroids and calcineurin inhibitors and the new injectables and orals, are not effective for every patient. Only 30-60% may see improvement. They also largely target inflammation only, while we treat the itch, inflammation and bacterial components including the difficult to treat atopic dermatitis disease stage of infection. Also, many current treatments come with serious side effects that require an FDA box warning. This is the strongest warning required by the FSA because of a significant risk of preventable, serious or even life-threatening adverse effects.
Zabalafin is a natural plant-based topical therapeutic, with a strong safety profile, great patient tolerability, and thus far demonstrated in our clinical trials. It’s a great option for children who have a high incidence of atopic dermatitis. Our product is a topical so it’s much less stressful and agreeable to kids than injections. Present these positives to physicians—safe, effective, natural drug, topical— and they are open to prescribing and tell us many of their patients will prefer it.
BP: Your API (active pharmaceutical ingredient) is unique. Can we touch on that?
NK: Sure! It is one of the defense mechanisms of a tree, a liquid, which the locals call dD
BP: Where are you in commercialization?
NK: We completed our Phase 2a clinical trials in 2023, with good results. We’re now in the middle of Phase 2b trials and expect to complete them by first quarter 2026. The next step would be Phase 3 trials, after which we’d submit results to the FDA in an NDA in 2028 requesting FDA approval to market. However, we’ve built global pharmaceutical companies in the past and don’t want to do that anymore. Our focus is developing effective drugs for placement with corporate partners. Our plan is to pursue a liquidity event at the completion of our Phase 2b trials. We have several pharma companies watching closely.
BP: You’re very bullish on having a liquidity event within 18-24 months and at a multiple of 20-25x. What are you basing this on?
NK: Pharma is actively seeking and acquiring atopic dermatitis drug candidates. Examples in the last four years, Amgen, Sanofi, and J&J, have done billion-dollar deals on companies that were either Phase 2 complete or earlier in development.
BP: Wow!
NK: Exactly. Which is why we’re focused on successfully completing our Phase 2b clinical trial in early 2026. This will provide us with our first opportunity for an industry standard liquidity event 18-24 months from now.
BP: What protection do you have from competitors?
NK: We expect we are well protected. We have a U.S. issued patent for compositions of matter and methods of use of our drug product providing protection to 2042 and an extensive patent applications portfolio submitted in key worldwide markets. Our drug raw material supply asset is expected to provide 15 years’ head start protection. We anticipate we will have regulatory exclusivity from date of approval for up to 10 years from the FDA and up to eight years in the EU and Japan. Finally, we expect to have protection in the U.S. from generics.
BP: What round is this and what are your planned use of funds?
NK: This is an $18M Series B, with $11.3M in the bank and 1.2M circled. The $11.3M already in the bank pays for two key milestones, one being the standard size Phase 2 clinical trial and the other being a significant addition to our drug raw material asset now sufficient for $2.7 billion in sales. This can drive a liquidity event.
BP: Give me three reasons VisionTech investors should write checks to Alphyn?
NK: This investment opportunity is largely de-risked. We have a unique drug platform that can help many people with safer, effective solutions. This is an opportunity to return a terrific multiple in the near term. And here’s a fourth: we’re a group of experienced people who have done this before. What’s not to love?
VisionTech’s Virtual Pitch Event featuring Alphyn Biologics CEO Neal Koller on Monday, May 19 begins promptly at 12 noon ET. We will have a full hour for Neal’s pitch and questions from participants. VisionTech virtual pitch events are open to our member-investors. Guests interested in joining our group are welcome to attend our May 19th virtual pitch with advance approval. Please register here.
